Before I begin, please understand – this is not a property sob story

This is simply one example of how the changes to the Australian property market have affected first-time home buyers.  In this case – me!

As a 30 year old living and working full-time in Sydney, I’m definitely in the demographic expected by most to be entering the market.

I have been working for several years, I’ve saved a bit and feel comfortable I can now take on the responsibilities of a loan.

I’ve done the hard yards of sharing and renting. Surely, this is the age when I should get my foot on the first rung of the property ladder?

So I was excited to join the throngs who spend their Saturday’s waiting for agents to show their finest. It is a right of passage, a journey that should, actually be filled with fun and anticipation.

With a budget of around $700,000 – the average unit price in Sydney is around this price – I was confident.

I wasn’t looking for a mansion.  Just a place for me to live with a second room that I could rent out to offset the repayments. With my budget, I accepted  I would probably have to search further afield in order to find something in my price range.

But I wan’t prepared for what greeted me.  And I freely admit I probably should have been, given the graphic reports of singles and couples all over Sydney whose heartrending search for a home has been far longer than mine.

In truth, when I called agents I was offered very little, and the compromises came thick and fast.

Could I live more than an hour away by train? Would I consider buying an ‘off-the-plan’ apartment and moving in sometime in 2019? What about buying an investment property somewhere else and continuing to rent in the city?

None of these are easy compromises to make, especially when I was already trying to keep my expectations in check when I started looking.

To add to the disappointment, the few properties I’ve seen so far that were supposed to be in my price range ended up selling at auction for significantly more than the sales guide had indicated. One, for instance, was offered for $720,000 but actually went for a whopping $820,000

I read every day stories of how house prices are continuing to spiral.  And now I am beginning to wonder if my dream can ever be realised.

I know that many of you will have far sadder stories than this – and we would love you to share them, so that we can see the human face of a problem now worrying our political leaders.

Meanwhile, in my own case, I just don’t know what to do.

Here are Lisa’s thoughts on my situation:

  1.  You need to keep looking and pounding the pavement.  Unfortunately, no matter how much money you have to spend on a property, it never seems to be enough.  Back when I first started, I remember myself thinking, “…if only I had an extra $100K…”  For a $700K budget, you should be able to find a suitable 2 bedroom apartment in the inner west of Sydney.  It is a matter of going to every open house so you get a great feel for the market.  I think I viewed more than 60 apartments before I found one I wanted to buy.
  2. Be careful about paying for someone else’s renovations.  The average cost for renovating a 2 bedroom apartment including a new kitchen and bathroom is about $50,000.  So I would be looking for cheaper apartments that are in need of an update.  That way you can add value which you can extract when you sell.  Additionally, the lower the amount you pay, the lower your stamp duty amount will be.
  3. There is a lot of talk that there will be a glut of CBD apartments in Sydney by the end of 2017, putting downward pressure on prices.  It might be worth waiting, giving you a chance to save a bigger deposit as well.
  4. Finally, be super careful about over-extending yourself with a massive mortgage.  It could ruin your life and make you very unhappy.  I would try to lock in a tenant (or at least be certain how much rent you would get from a tenant) to ensure that you have money for a sudden change in your personal circumstances… or if you would want to do more than be a slave to your mortgage.

Are you currently starting out in the property market too? If you have questions, feel free to drop us a line through our ‘Ask A Question’ forum and a Money Expert will get back to you!

And if you have any advice for my situation, please leave them for me in the comments below – I’d love to read them!

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